This issue focuses on staff development, including how to build a meritocracy, learning and development and a staff development article. As well as a Pensions Regulator article on automatic enrolment and is a robot after your job article about working with robots perhaps becoming the only way to meet increasing payroll demands. Along with our regular features and news.
in Payroll, Pensions & Reward PROFESSI NAL Issue 25 November 2016 Official publication of The Chartered Institute of Payroll Professionals
Staff development
Is a robot after your job? Sharing knowledge
Employing illegal workers Puzzling legalities
Simplifying the PSA process Gear change ahead
CIPP update | Policy hub | Professional development
welcome
Editor’s comment
– protested against newly developed labour-economising technologies. (Incidentally, income tax was created in this period.) Now, ‘Luddite’ describes a person “opposed to industrialisation, automation, computerisation or new technologies in general” (source: https://en.wikipedia.org/wiki/Luddite). While it’s understandable to fear new technologies and ways of working, I firmly believe that going forward payroll professionals will continue to embrace ‘robots’ in order to get the job done efficiently and effectively and that payroll will increasingly demand high levels of skill and knowledge.
Occasionally I have cause to recall potent imagery from the 1927 film Metropolis : low-skilled workers operating machines in mechanistic, almost robotic, movements pressing buttons and levers; and the creation, at the direction of the city’s master, of a female android (a robot in human form) which proceeds to cause chaos. Unsurprisingly my attention was caught by Henry Tapper’s article ‘Is a robot after your job?’ (page 46). Henry opines that “Working with robots may be the only way that payroll will be able to meet the increasing demands being put upon it.” Although I don’t believe a real android will be created any time soon, I agree with Henry’s opinion simply because computerisation has been and will continue to be transformational in payroll. Workers inevitably react to threats to their livelihood. In the early 19th century, the Luddite movement – which emerged during the harsh economic climate of the Napoleonic Wars
Mike Nicholas MCIPP AMBCS Editor
This month’s contributors
Ilya Bonic uk.mercer.com
Sarah Bradford BA (Hons), ACA, CTA (Fellow) sarah.bradford@writetax.co.uk
Diana Bruce MCIPPdip policy@cipp.org.uk
Danny Done portfoliopayroll.com
Stuart Earle eversheds.com
Stephen Frost frostincluded.com
Helen Hargreaves MSc FCIPPdip policy@cipp.org.uk
John Harling pstax.co.uk
Nicola Mullineux peninsula-uk.com
Samantha Mann MCIPPdip policy@cipp.org.uk
Lisa Gillespie moorepay.co.uk
Jeanette Hibbert jeanettehibbert@googlemail.com
Henry Tapper MSFA MA Cantab firstactuarial.co.uk
Neil Tonks MCIPPdip midlandhr.com
Adam Reynolds webexpenses.com
David Woodward sdworx.com
1
Issue 25 | November 2016
| Professional in Payroll, Pensions and Reward |
in Payroll, Pensions & Reward PROFESSI NAL
Also available online at payrollpensionsandreward.org.uk
Contents
November 2016
34
Extending parental leave policies
Ilya Bonic discusses global developments
Features
18
16
17
Termination payments John Harling reviews recent developments and forthcoming changes
Disguised remuneration Sarah Bradford outlines proposals to tighten the rules
Check-off and facility time Mike Nicholas sets out changes
20
23
22
Learning and development Lisa Gillespie explains that cutting training and development is often a false economy
Simplifying the PSA process Samantha Mann reviews consultation proposals
Staff development Jeanette Hibbert provides guidance on this crucial issue
| Professional in Payroll, Pensions and Reward | November 2016 | Issue 25 2
26
32
Editor Mike Nicholas 01273 412 836 | editor@cipp.org.uk Advertising Jill Bonehill and Jack Grinnell 0121 712 1033 | advertising@cipp.org.uk Design James Bartlett and Nicole Gumery design@cipp.org.uk Printing Warwick Printing Company Ltd
Employing illegal workers – the net tightens Helen Hargreaves brings us up to date with frequently changing legislation
How to build a meritocracy Stephen Frost reveals what needs to be done
42
35
Chief executive Ken Pullar FCIPP CIPP board of directors Gordon Cresswell FCIPP Michelle Crook MSc FCIPPdip
Navigating the Brexit challenge David Woodward discusses HR strategies to stay in control
Automatic enrolment and pay reference periods Guidance from The Pensions Regulator
Jason Davenport ACIPP Eira Hammond FCIPPdip Ros Hendren MSc FCIPP, Mgr, FCMIdip, FHEA Paul Rains MCIPP Karen Thomson MSc FCIPP, FHEA Cliff Vidgeon FCIPP Ian Walters Msc, FCIPP, FHEA Ian Whyteside MCIPP, FMAAT, ATT
46
49
Useful contacts Membership membership@cipp.org.uk 0121 712 1073 Qualifications qualifications@cipp.org.uk 0121 712 1023 Training training@cipp.org.uk 0121 712 1013 Events events@cipp.org.uk 0121 712 1013 Marketing and sales marketing@cipp.org.uk 0121 712 1033 General enquiries
Is a robot after your job? Henry Tapper discusses how the role of payroll professionals could change
Managing petty cash Adam Reynolds explains a smart way is available
Regulars
05 Chair’s and CEO’s message Events, news and developments 06 Membership insight On your behalf, Advisory, Five minutes with 11 CIPP update 13 Professional development Diary of a student
31 Reward news 32 Reward insight 41 Pensions insight
Employment law cases, Business relocation
0121 712 1000 info@cipp.org.uk
Pensions bulletin: VAT and pension scheme costs, The Pensions Regulator, ONS survey of occupational pension schemes
cipp.org.uk @cipp_uk
14 Payroll news 15 Payroll insight 22 Feature articles 28 Event horizon
47 Pension news 48 Charity news 50 A week in the life of 51 Confessions of a payroll manager
Articles Please support this magazine so that it can continue to be a part of your membership package. Trademarks The CIPP logo, the initials ‘CIPP’ and the words ‘Professional in Payroll, Pensions and Reward’ and ‘CIPP Consult’ are trademarks of the Chartered Institute of Payroll Professionals. Copyright: The Chartered Institute of Payroll Professionals 2016. The Chartered Institute of Payroll Professionals, CIPP, Goldfinger House, 245 Cranmore Boulevard, Shirley, Solihull, West Midlands, B90 4ZL. Switchboard 0121 712 1000 Fax 0121 712 1001 Copyright This magazine is published by The Chartered Institute of Payroll Professionals in whom the copyright is vested. All rights reserved. No part of this publication may be reproduced, stored in a retreival system, or transmitted in any form or any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the publisher. The views expressed in this publication are not necessarily those of the CIPP or the editor. The information and comment contained in this publication are given in good faith, their accuracy or completeness cannot be guaranteed.
Industry monitor: Company cars and payrolling
3
Issue 25 | November 2016
| Professional in Payroll, Pensions and Reward |
FREE Employment Law advice
We’re offering CIPP members FREE* access to our experienced team of HR & Employment Law subject matter experts during 2016 (*T&C’s apply). Call the CIPP/Moorepay Employment Law & Advice Helpline quoting CIPP001 on 0845 1844607.
*T&Cs: Telephone advice & guidance only. The service is available from 9am to 5pm Monday to Friday until 30th November 2016. A Fair Usage Policy applies (maximum of 3 calls on one ongoing HR case).
Payroll & HR Solutions
If you do not change direction, you may end up where you are heading. Lao Tzu (6th century BC)
Chair’s message
Autumn is one of those times in the year when things seem to ramp up in the payroll industry. I know we have year-end and some legislation changes in the spring but
enjoy most about the conference, and to get feedback on where we can improve for future years. Autumn also seems to be the time for new starts. Those of you who know me fairly well, or follow me on Twitter (@eirajane), will know that for the past two years I’ve been involved (for the first time in my life) in musical and theatrical productions of Jesus Christ Superstar . With a cast of over 200 for each year, we performed the iconic rock opera in the wonderful surroundings of Lincoln Cathedral. A few weeks ago we had the great news that the show being performed next year will be Jekyll and Hyde the Musical . This will be staged once again in Lincoln Cathedral next August, and I’m delighted to be able to join the cast again. Rehearsals have just commenced and this time, as there are a few more female parts up for grabs, I’ve decided to audition… I can just see myself as Lady Beaconsfield, one of the board of governors. Whether I’m successful or not doesn’t matter – it’s all about having a go. And solo part or not, I’m going to enjoy being part of this community theatre again for a third year.
autumn seems to be the time for celebration. The Annual Conference took place at the Celtic Manor Resort, Newport on 6 & 7 October and was a spectacular event as usual. Since taking over from Paul Rains as chair in August, I had a few more duties at this year’s event than in the past: overseas guests to host, as well as opening and closing the conference and introducing our keynote speakers, not to mention presenting the awards gifted by the CIPP at the Annual Excellence Awards hosted by Simon Weston. I always thoroughly enjoy the conference, meeting lots of old friends as well as many new ones, and I always try to make the most of the learning experience for my continuing professional development. This year was no exception, with brilliant workshops and speakers covering a variety of topics in payroll, pensions, reward, global payroll and personal and professional development – meaning that there was something for everyone. You can read more about the conference within this year’s supplement included with this issue. For those who joined us for the full conference, or attended the glitzy and glamorous Annual Excellence Awards, thank you for your support; it was fantastic to see you all there celebrating your industry. It’s wonderful for me to hear all about what you It has been a few years since I last wrote within the magazine, and at that time it was as chair of the (then) IPP. I now write to you as CEO of the CIPP. My introduction to you as CEO is during one of the CIPP’s busiest periods, and I was delighted to meet so many of you at the CIPP’s Annual Conference and Exhibition, and celebrate with our winners at the Annual Excellence Awards. Those of you who attended the annual general meeting (AGM) at the Annual Conference in October will have heard about the board’s plans for the CIPP, and, importantly, our renewed focus on our core business. We plan to make sure that our education and membership support offerings are fit for purpose, and that you, as members, can be assured of excellent quality from any of the services which you engage in through us. There is a summary of the AGM on page 11 and we shall be surveying members shortly to assist us in our future plans and developments. November is also a time for celebration as we hold our Graduation Ceremony for those who have successfully
Eira Hammond FCIPPdip, chair, CIPP
CEO message
completed our university approved qualifications. I am looking forward to welcoming the newly qualified CIPP
graduates and members on 4 November at the Dominion Theatre in London. Remember to maintain your membership with the CIPP and
keep your knowledge and skills up to date through continuing professional development (so that you can use your well-earned letters after your name). With the graduation taking place this month, it is quite fitting that the theme for this issue is staff development, covering identifying and assessing learning needs, as well as developing skills gaps through training and qualifications. Happy reading.
Ken Pullar FCIPP, CEO, CIPP
5
Issue 24 | October 2016
| Professional in Payroll, Pensions and Reward |
MEMBERSHIP INSIGHT
On your behalf
Policy team update
Diana Bruce MCIPPdip, CIPP senior policy liaison officer , provides an update on two topics Off-payroll working in the public sector consultation time, and where they do the decision flow chart and tests may need to be revisited.
by the engager to enable the correct decision to be made. If clearly defined and consistent rules don’t exist then the impetus to deliver/disclose information will not happen. The digital tool (see below) should be backed by clearly defined expectations of what information needs to be gathered and provided and by whom. Guidance should be unambiguous to enable engagers to adapt or establish processes and a clearly defined policy which should include reference to the digital tool. ...support for private companies carrying out public functions to be included... ● Making the decision – The decision flow chart appears to ask the right questions with the right priority and to rule out engagements that are out of scope and to be simple to understand and use. The reality, however, is rarely straightforward, and so we hope that guidance is being developed that adds more depth and includes more examples that an engager may encounter. There should be a recognition that IR35 guidance will, in the future, be accessed by a far greater number of practitioners than in the past as the onus shifts from the small number of PSCs (and their professional advisers) to a wide range of engagers/employers with teams working in payroll, human resources, finance and procurement departments. If all facts are known, the two parts of the decision flow chart have the capacity to provide engagers with certainty on day one of the hire – in an ideal world. Processes will need to recognise that situations and answers may change over the course of
Budget 2016 announced proposals to reform the off-payroll rules for personal services companies working for a public sector engager. This consultation, which is about reforming the intermediaries legislation to improve its effectiveness in the public sector, sought views on the impact and on the design details of the policy, including a new digital process to help determine whether an intermediary is in scope. The Institute’s policy and research team submitted their formal consultation response to this consultation at the end of August. We reiterate that we respond from the viewpoint that use of a personal service company (PSC) simply to gain a tax or National Insurance contributions (NICs) advantage is unacceptable. We continue to support increased enforcement by HM Revenue & Customs (HMRC) that results in increased protection of vulnerable workers employed inappropriately through PSCs. Our findings, see below, have been gathered from a mix of survey results and anecdotal evidence. ● Definition of the public sector – The Freedom of Information Act 2000 and the Freedom of Information (Scotland) Act 2002 provide a definition that will result in a clearly recognised and consistent approach to defining and recognising public sector engagers. There is overwhelming support for private companies carrying out public functions to be included within this definition; in fact, we go further and say that subject to a satisfactory timeline for implementation (see below) no sector or size of engager should be excluded. Evidence suggests that all sectors and engager/employer sizes are at risk of non- compliance with IR35; to exclude sectors adds complexity. We believe that there should be a legal duty to disclose the information required
Also in an ideal world, this information and data will be collected as part of the procurement/pre-employment checks, so robust processes based on clearly defined and mandated rules will be needed. ● Digital tool – A robust, reliable and consistent mandatory digital tool will be fundamental to successful delivery of this proposal so we welcome HMRC’s encouragement for expressions of interest. Working in collaboration with all stakeholders to design a robust digital tool is the way to ensure every possible view and experience is captured in the end product. We are concerned, however, at the delivery timeline. We do not believe that a robust tool will be delivered and fully tested against all possible situations by 6 April 2017 when it will be needed. ● Transfer of liability – We agree that when the rules have not been applied liability for tax and NICs (and penalties and interest where appropriate) for the incorrect operation should fall to the engager/ agency. However, where the PSC has given false information to the engager liability should transfer to the PSC and its directors. We are likely to see a greater volume of individuals’ pay being processed via PAYE ‘just to be safe’. We predict greater use of the appeal process where the PSC and/or engager disagree. This has disadvantages, but the most critical for the purpose of the response are: ❍ increased administrative costs and burdens to the engager and PSC ❍ increased costs to HMRC to process appeals. ● Costs – There is a strong belief that there will be significant additional costs, both for administration and by way of contract sums. The latter are predicted to increase to account for the impact of IR35 being operated ‘just to be safe’ by risk
| Professional in Payroll, Pensions and Reward | November 2016 | Issue 25 6
Policy hub
averse engagers. Further research, based on known workings of the digital tool along with informed decision making on the additional processes required (by both engager and PSC, and agency where applicable) would be needed in order to quantify actual costs. implementation until April 2019 and an expansion to all engagements caught by IR35 to include the private sector. This would provide ample time to design, build and thoroughly test the new digital tool. This can only be achieved with a measured and unrushed delivery. A staggered approach, first to the public sector and then to the wider private and third sector, will cause unnecessary complexity and do little to aid wider understanding of IR35. Transferring the burden to all engagers would provide consistency across the board. IR35 is viewed as a specialist area by the majority of payroll professionals who will need to become knowledgeable by the delivery time line. News and information must be promoted to the wider public sector engager community and their agents as a matter of urgency to alert them to the need to adapt and strengthen their internal processes and to begin collecting the data that will enable payroll departments to process ‘deemed payments’. In addition, it needs to be recognised that there may be a delay in collating all information so not all deemed payments that are processed via real time information (RTI) may be reported ‘on or before’. An appropriate late RTI submission reason code should be added to allow for the increased and legitimate risk of this occurring as quite often in a large organisation the decision maker may be remote from the engager. Thank you to everyone who took the time to respond to this survey. The full response can be accessed through our website www.cipp.org.uk under My CIPP/Policy Hub/Consultations. Claiming tax relief for employees One of the topics covered when policy Recommendations We ask both for a delay in
attended the Employment and Payroll Group (EPG) meeting in the summer, was feedback on the tax relief claiming process, where employees have used their own money for business-related expenses and not been reimbursed by their employer. To understand customer experience, HMRC spoke to a wide range of stakeholders including employers at the Taxpayer Data Standards Forum (TDSF) and the voluntary charity sector and carried out research with taxpayers. Two main blockers to claiming tax relief from HMRC were highlighted: the complexity of the current guidance; and the challenges of the claim process itself versus the actual value of the amount claimed to the employee. Stakeholders confirmed that flat-rate expenses are the most common claims for employment expenses. Research shows that some customers have turned to high volume repayment agents (HVRA), which take up to 40% of the refund in fees and commission, to claim tax relief on their behalf. Of those consulted, many believe more taxpayers will claim directly if HMRC simplified their guidance and improved the claim process. HMRC has acted quickly to enable customers to claim tax relief for free. The P87 form (for claiming employment expenses online) has been made easy to complete and submit, and customers can save and retrieve information online and track progress of their claim. The P87 form also improves data accuracy as it rejects erroneous information such as National Insurance numbers in an incorrect format. information online and track progress of their claim Tax relief can be claimed via the new personal tax account: open the PAYE section, click on ‘Tax relief for expenses of employment’ and send the P87 form to HMRC online. We encourage everyone to register and to access their personal tax account. Personal and tax related records can be checked and details managed with HMRC. Go to www.gov.uk/personal-tax- account to register. ...can save and retrieve
Training course
Certificate in Payroll Practice
This course is aimed at both new people who require an introduction to payroll, and those already working in the profession, who want to refresh their skills and gain confidence within their role. Delivered over three days via classroom learning, this course covers a range of topics from core payroll skills, through statutory payments and associated legislative changes, and concluding with deductions from pay and the interaction between payroll and other internal and external bodies.
For full details or to book your place, please visit cipp.org.uk , email training@cipp.org.uk or call 0121 712 1063 .
Counts towards CPD
cipp.org.uk cipp.org.uk
7
Issue 25 | November 2016
| Professional in Payroll, Pensions and Reward |
MEMBERSHIP INSIGHT
Q: Due to the abolition of contracted- out NICs a client has decided to pass on the cost of the additional employer NICs to the workforce. How should this be deducted from pay, and is it a legal right that this deduction can be taken from employees? A: An employer is allowed to change the rules of the pension scheme without permission from the pension’s scheme trustees in regard to the extra cost to the pension scheme, due to the abolition of contracted-out NICs, but not for the extra cost of the employer’s NICs to be deducted from employees’ pay. So it will depend on the rules of the scheme as to whether employee pension contributions will increase. However, if there is an increase in pension deduction the employee would be entitled to tax relief. Q: Please could you confirm the tax code that is applied to a new starter who signs statement C on the starter checklist? And what tax code would apply were the form not to be signed? A: If the employee signs statement C you would use code BR cumulatively, and if they have not signed the starter declaration apply code 0T on the non-cumulative (week 1/month 1) basis. This link – http://goo.gl/Rg82TN – is to GOV.UK guidance which assists employers in deciding which tax code to use in these situations. Just click into start and tick the box ‘you don’t have their P45’ and follow the directions. Q: The company has multiple PAYE schemes. How will the apprenticeship levy allowance of £15,000 applied? A: The apprenticeship levy allowance is available to one PAYE scheme for the full year. The levy allowance is operated on a monthly basis which accumulates each month. Where the allowance is not used up in a tax month it can be carried forward to the following month until the end of tax year is reached. Where the employer does not use the whole of the levy in the allocated PAYE scheme by the end of the tax year, the employer can apply the residue to another PAYE scheme. Q: If an employee works a keeping in touch (KIT) day would you pay the employee SMP for the day(s) and a salary for the hours worked? A: SMP can be offset against any
Advisory Service is available 9a.m. to 5p.m. Mondays to Thursdays, and 9a.m.
to 4.30p.m. on Fridays. It is free to all CIPP members * , students and attendees of approved CIPP courses and conferences in the last six months. Call 0121 712 1099 , email advisory.service@cipp.org.uk or visit cipp.org.uk for frequently asked questions.
Advisory
*please see summary at cippmembership.org.uk for details.
Q: An employee has just requested that her employer cancels the salary sacrifice and makes a refund of childcare vouchers of £3,000. Is this possible? A: A company can choose to refund the salary sacrifice for childcare vouchers; however, this could mean that the scheme could be invalidated. This is because it could change the scheme from one where the employee can receive vouchers that can be exchanged for childcare only, to one where the vouchers can be exchanged for cash or childcare. The exemption from pay as you earn (PAYE) and National Insurance contributions (NICs) is satisfied only if the vouchers can be exchanged for childcare. So, great care should be taken before refunding the value of any childcare vouchers to the employee. However, there would be an exemption where a life-changing event occurred e.g. the employee was made redundant. For clarity, please refer to HMRC’s Employment Income Manual , page EIM16051, at http:// goo.gl/cNxYwF. Q: What tax code is applicable when the employee is a student working during the holiday period? A: The employer must ensure the employee completes a starter checklist and use the appropriate tax code appropriate to the statement the employee has signed. Until the introduction of real time information any students who worked outside of term time could fill in a P38(s) form and be exempt from PAYE if they did not exceed the earnings threshold in the tax year; however, this form can no longer be used.
Q: A weekly paid employee is due to take statutory maternity leave (SML). During the last week of the set period the employee has been paid a week’s holiday pay in advance. Should the earnings be divided by eight or nine to calculate the average weekly earnings ? A: The week’s holiday pay would be classed as a mistimed payment, and therefore instead of dividing the payments in the set (relevant) period by eight you would divide the payment by the number of weeks paid, which in the scenario above is nine weeks. This link – goo.gl/dr8k4o – to HMRC’s Statutory Payments Manual provides examples of how mistimed payments occur, and one of them is when an employer pays holiday pay in advance. If the employer pays two weeks’ pay in advance then the employee has been paid ten weeks, and the total paid should be divided by ten instead of eight. Q: An employee satisfies all criteria to be eligible for statutory maternity pay (SMP) and SML. She plans to visit Spain. Is there a rule that states she would not be allowed to receive SMP if she is out of the country for more than four weeks in a row? A: If the employee satisfies all the requirements and is entitled to SMP, it can be paid to the employee anywhere in the world. This link – http://goo.gl/fi3Cyi – is to the NI17A technical guidance on GOV.UK for future reference. Please refer to the end of paragraph 3.4 which explains that SMP can be paid anywhere in the world, if the employee travels abroad.
| Professional in Payroll, Pensions and Reward | November 2016 | Issue 25 8
Policy hub
Consult
contractual pay for the same period of leave. If the employee works a KIT day they must be paid at least the national minimum/living wage for the hours worked, but it is for the employee and employer to agree what will be paid for the work prior to the work being performed. As the payment of SMP is for seven calendar days it would be best practice to divide the SMP by seven and offset the value of a day against any KIT day payment. An employer could choose to be more generous and pay the SMP without offsetting it against the payment for the KIT day. Q: An employee has provided a MATB1 certificate which is incorrect. What is the process that should be followed? A: As the MATB1 is incorrect you will need to ask the individual concerned to provide proof of the correct date. This can be in the form of a letter from the doctor or midwife confirming the correct date; alternatively, as the document is obviously incorrect then under the circumstances it may be best practice to request a new MATB1. Q: A new employee has a Scottish address. Should a Scottish tax code be applied to the payroll record automatically? A: The process relating to new joiners and Scottish rate of income tax (SRIT) will be as follows: ● Where there is a new starter, and there is no indication of an individual’s tax status, the default will be a UK tax payer. ● HMRC will be responsible for any in- year address changes and will, as part of their processes amend an individual’s tax code. ● There will be no specific SRIT emergency tax so there will be no change in week 1/month 1 processes; the default tax code will be the UK tax code until HMRC advises differently. ● Any under- or overpayments, as now, will be corrected through the normal end of year reconciliation process. Q: How should overseas workday relief (OWR) be operated, and is there any documentation regarding withholding tax from an employee who is eligible for OWR and how to process this through the payroll? A: OWR is a tax relief available to
non-UK domiciled taxpayers. This relief allows them to treat their unremitted employment earnings relating to the duties performed overseas as not taxable in the UK provided certain conditions are met. An individual can claim OWR in a tax year where they meet all of the following conditions: ● they are considered as not domiciled in immediately following three consecutive tax years for which they were not UK resident, or one of the two tax years after such a year ● they are taxed on the remittance basis during this tax year ● they have employment duties during the tax year which are carried wholly or partly outside the UK, and ● they are paid in an offshore bank account. An employer can apply under section 690 of the Income Tax (Earnings and Pensions) Act 2003 for a direction from HMRC to operate PAYE only on the percentage of the employee’s total earnings that are for work in the UK. This applies to all payments made by the employer including termination payments and share based remuneration. Under section 690 they may then apply PAYE only to the proportion of their earnings that relate to UK work. Note that: ● the percentage will be based on the employee’s workday history or as anticipated for an individual starting employment during the tax year ● an application under section 690 cannot be made for previous tax years ● Class 1 NICs are payable on 100 per cent of the earnings ● if the employer has to apply the percentage limit to previous earnings in the current tax year, it will be necessary to correct the year to date entries in the next full payment submission report sent to HMRC. Application for a s690 direction must be sent to: Self-Assessment, HM Revenue and Customs, BX9 1AS. For further information, see: ● Guidance Note: Overseas Workday Relief (OWR) – http://goo.gl/VEkfDf ● HMRC’s PAYE Manua l – http://goo.gl/ jyHVqn. n the UK throughout the tax year ● they are a UK tax resident ● this tax year is the first tax year
At CIPP Consult, our experienced and qualified consultants specialise in reviewing payroll operations with a ‘fresh pair of eyes’ to recommend innovative improvements to processes and ways of working; leaving you to focus on ensuring that your employees are paid ‘on time and accurately’. For more information on the range of services we can offer, please visit cipp.org.uk or email consult@cipp.org.uk . Delivering tailored solutions for the payroll profession
cipp.org.uk
9
Issue 24 | November 2016
| Professional in Payroll, Pensions and Reward |
MEMBERSHIP INSIGHT
5
minutes with…
Ken Pullar FCIPP CIPP’s newly appointed chief executive officer from 1 October 2016
That we continue to be seated within government consultation forums providing a voice to our members and the industry. And that employers realise that employees in their payroll department having a payroll qualification isn’t a ‘nice to have’ but a requisite in performing their career, that continuing professional development is actively pursued and maintained and that the learning requirement never ceases. What does the future hold for the payroll, pensions and reward departments? If one thing hasn’t changed over the ages, it is that people will always need to be paid, receive rewards and be paid a pension. It will therefore continue just to be as busy and demanding a role as it always has been, predicated on accuracy and timeliness – and this path can be made ’easier’ through education, membership and recognition supported by the CIPP. What has been your biggest career highlight? There have been many – travelling the world through payroll, setting up outsourced operations in India, seeing people I have either interviewed or at their early stages of their career rise to great levels of success and seniority – and hopefully more highlights to come. What do you do in your free time to unwind? Free time? – I look forward to that. Summer golfer (averse to rain/snow, wind and the cold) and for the winter evenings working on my family tree: some ten years of research to date and still miles to go. n
Can you give an insight into your background? As many people, friends, colleagues and associates will know (as I have recounted many times), I entered the world of payroll as a mere seventeen-year old, collecting clock cards weekly for some 200 electricians on a remote Scottish gas terminal. My desk had a window overlooking the machine just to make sure the right people clocked in and out. From there it was compiling wages in cash and then facing the queue every Friday morning to pay out. And they knew to the penny what their pay was, and woe betide me if it was wrong. But a great education for embarking on my payroll career. Since that early start I had a number of payroll management roles in the public sector before entering the outsourcing arena in various service director roles: head of business processing outsourcing operations right through to global outsourcing director within the payroll and human resources services sector. And suddenly realising 35+ years’ have passed me by so quickly. How does your role impact the CIPP’s overall strategy? Well, we are the Chartered Institute of Payroll Professionals – so that needs to be our main focus alongside our pension colleagues. Our mission statement sets out our
journey of leading payroll and pension professionals through education, membership and recognition. So we need to ensure our membership see our qualifications as material to their aspirations and career, that our learning experiences are focussed, up to date, informative and of world class quality – so that they are valued and recognised not just in their line of industry but as a key component and critical to the success of their employers and organisations. ...leading payroll and pension professionals through education, membership and recognition Where would you like to see the CIPP in five years from now? That we still are the ‘go-to’ organisation for all payroll and pension professionals, whether embarking on their career as an apprentice right through to those wishing to achieve the MSc. That when training, learning, understanding and implementing new legislation we are the first organisation individuals think of to support them.
| Professional in Payroll, Pensions and Reward | November 2016 | Issue 25 10
CIPP update
CIPP update
CIPP’s summer sizzler raises money for local charity THE CIPP held its annual charity summer sizzler on Wednesday 14 September with support from local businesses The Farm, Ember Inns and Red Watch from Solihull Community Fire Station. The event and other initiatives run by the CIPP throughout the year have collectively raised over £1,500 in donations to local children’s charity Acorns, and national charity Cancer Research UK. Attended by CIPP staff and their families, the event featured activities such as tombola, raffle, book and DVD stall and a barbecue to raise money for the charities. In addition, the Institute held the popular ‘Where’s Daniel?’ where guests had to find Daniel Craig in the photo of CIPP’s head office, Goldfinger House, a play of the James Bond connection due to the architect Erno Goldfinger and his relationship with Ian Fleming. Shirley Harris, CIPP’s head of human resources and payroll and member of the charity committee, commented at the event “We are delighted with the donations raised for the CIPP’s chosen charities to date. The employees select which charities they choose to support throughout the year and have been supporting local charity Acorns for a number of years to support terminally ill young people and their families in the community.” remember Ken as a former chair of the board and more recently has been supporting the CIPP as business operations director. We are also delighted to announce the appointment of Elaine Gibson to education director. Her education portfolio will include the responsibility for delivering marketing and membership, policy and research, training, Professional Careers Academy, Scotland and online teams. Elaine will report directly into Ken. The emphasis going forward will be to focus on the quality and delivery of our core services; the opportunities around education, qualifications and training will continue to be the foundation of the CIPP. The board wishes both Ken and Elaine every success in their new roles in continuing to develop the ongoing advancement of the CIPP. Changes to CIPP’s senior management team THE CIPP’s board of directors wishes to notify all members about changes to the senior management team. With effect 28 September 2016 Lindsay Melvin is no longer employed by the CIPP. With immediate effect the new chief executive officer is Ken Pullar; many of you will
CIPP’s Annual General Meeting THE CIPP’s nineteenth annual general meeting (AGM) took place on Thursday 6 October at the Celtic Manor Resort, Wales. Its purpose was to consider and, if thought fit, to pass the following resolutions: ● Approval of accounts for the year ended 30 June 2016 ● Re-election of auditors ● Any other business There were three vacancies and three nominations received which met the application standards which consequently meant there was no requirement for a vote. The three appointed non-executive directors are Michelle Crook, Ian Whyteside (both serving directors retiring by rotation) and newly appointed Karen Thomson. Karen commented: “I am delighted and feel very privileged to be joining the CIPP board of directors. I am looking forward to helping the Institute and its members continue to grow over the coming years.” The other resolutions were voted as follows:
● Approval of the accounts: for 60 votes, against 1 vote ● Re-election of auditors: for 52 votes, against 9 votes The following question was asked at the AGM: Mike Nicholas MCIPP AMBCS, Editor of the CIPP’s Professional in Payroll, Pensions and Reward magazine: “In regards to the accounts deficit; when were the board made aware, what actions were then taken, what has been done to rectify this and what is now being put in place to avoid it happening again?” Eira Hammond FCIPPdip, Chair, CIPP: “The board were notified of the deficit in February 2016 and were assured that this was being rectified and would most likely be resolved by the end June, the end of the financial year. Additional processes have now been put in place following more stringent guidelines which will continue to be monitored more closely by the governance and audit and risk committees on an ongoing basis.” Many thanks to those members who voted and attended the 2016 AGM. To view the full profiles of the CIPP board visit cipp. org.uk .
11
Issue 25 | November 2016
| Professional in Payroll, Pensions and Reward |
@SageUK Linkedin.com/groups/Sage-HR-Payroll
Professional development insight
Karl Miller Payroll and pensions officer, Liverpool City Council Diary of a student…
For someone who is thinking about studying for a CIPP qualification what would your advice be to them? My advice would be to take full advantage of the skills made available from completing the course and apply them to your everyday work responsibilities. The CIPP qualification has improved the way I work and how I understand payroll. It will give you new skills and improve existing skills which can be applied to any payroll working role. Studying towards a qualification alongside a full-time job is no easy feat. How did you cope with the pressure as, like a qualification, payroll is very deadline driven? This was difficult. I always aimed to make time for my studies and make the deadlines that were given to me. My tutor was supportive throughout the course and was on hand with advice and help at all times. The CIPP website was very beneficial in researching information and had links to guides, webinars and presentations that were all very useful. How important would you rate qualifications to the payroll profession? I think qualifications are important to the payroll profession and the CIPP qualification is a very good mark of an individual’s skills and attributes. Now more than ever it is so competitive in the working world – by having the CIPP qualification it gives you a heads up against the competition. n A bit about me I currently live in New Brighton with my girlfriend but am originally from Liverpool. Outside of work my main interest is music – I play in a band and spend a lot of my spare time playing shows and writing new material. I enjoy socialising with my friends and am a keen real ale enthusiast.
Can you give us an insight into your career and qualifications background? I have been working for Liverpool City Council for around seven years. I perform the day to day payroll and pension processes for the Council’s employees and am primarily responsible in ensuring that employees receive the best possible service, are paid on time and correctly. Previously I worked in social housing for several local registered social landlords. I’d graduated from John Moores University with a degree in social sciences and planned to go into social work but realised it was not the career for me. Why did you decide to study the CIPP’s three-year Foundation Degree? I decided to study the CIPP’s Foundation Degree as it would improve my payroll skills and give me the potential to progress to a higher grade within my organisation. Several of my colleagues had recently completed their CIPP studies and had advised that they had benefitted from the course. Did the fact that the CIPP is Chartered or recognised within the industry influence your decision to enrol with the CIPP? And were there any particular modules which were of interest prior to enrolling? Several of my colleagues had completed the CIPP qualification and I had seen how it had benefitted them. I enrolled with CIPP because of the regard the qualification has within the payroll industry. Before the course started I was interested in and wanted to have a better
understanding of staff benefits and how they motivate staff within an organisation. One particular module in the third year of the course looked at this issue in detail which I found very interesting. Have you been able to utilise any new skills which have been recognised at work? I have been able to utilise several skills from my studies which have been recognised in my workplace. My understanding of HM Revenue & Customs (HMRC) regulations has been utilised when helping and advising co- workers. I have also gained knowledge from other students who work in other authorities about how they perform their day to day duties and how these other ways of working could be introduced to where I work. The skills I have learnt from my studies have benefited my day to day work activities to the fullest. The CIPP course has given me a wider appreciation of the impact that a payroll department can have on an authority. I am now more conscious of regulations affecting payroll processes and understand that what I do in my role is important to the overall reputation of the payroll and pensions department and my organisation as a whole. How has it helped you in your career and how you manage payroll? The course has given me a good insight into the skills needed to manage payroll and has the potential to help further my career. By having the qualification it gives me the potential to apply for more senior positions.
13
Issue 25 | November 2016
| Professional in Payroll, Pensions and Reward |
Payroll news
Public sector exit payment terms THE GOVERNMENT announced at the 2015 Spending Review and Autumn Statement that it intended to consult on cross-public sector action on exit payment terms to reduce the costs of redundancy payments and ensure greater consistency between workforces. In September 2016, The Treasury published its response to the earlier Reforms to public sector exit payments consultation (http://bit.ly/2cB3fZb). Although the government does not believe that there is a case at present for a fundamental reform of the way in which public sector exit terms are determined and delivered, it considers that a common framework of upper limits to the main elements of compensation provision across the main public sector schemes should be set. This framework sets: ● a maximum tariff of three weeks’ pay per year of service for calculating exit payments ● a ceiling of fifteen months on the maximum number of months’ salary that can be paid as a redundancy payment ● a maximum salary on which an exit payment can be based – as a starting point the government will expect this to align with the existing National Health Service scheme salary limit of £80,000 ● a taper on the amount of lump sum compensation an individual is entitled to receive as they get closer to their normal pension retirement age, and ● action to limit or end employer-funded early access to pension as an exit term. The government expects agreement to be reached and the necessary changes made to compensation schemes and other arrangements within nine months of publication of the response document. Should it not be possible to achieve meaningful reform for one or more public sector workforces, the government will consider options for primary legislation to take forward reform. RTI – micro-employers and agents A STUDY – Managing pay as you earn in real time: challenges faced by micro-employers (http://bit.ly/2dsMo06) – reveals micro employers are finding real time information (RTI) reporting challenging. The recent research involved only those known to have either received a penalty from HM Revenue & Customs (HMRC) for submitting a full payment submission (FPS) late or with missing/incorrect information, or had made use of an earlier year update (EYU). The report identifies that there is a lack of understanding of how pay as you earn (PAYE) should be managed – particularly what should be done and by when – which creates errors in RTI reporting, resulting in receiving penalties for late or missing FPS returns or the need to provide an EYU to correct earlier submissions. Technical understanding of PAYE is limited to basic ‘need to know’ information. (This applies mostly to micro-employers rather than to agents.) Few make use of HMRC’s education or support materials which are felt to be difficult to navigate and understand. Instead, an approach of learning ‘on the job’ is adopted, relying on experience through trial and error. Very few micro-employers engage with their agents to understand and retain information about their obligations. Where payroll is outsourced, understanding of requirements is dependent on the competency and capabilities of the agent used. HMRC’s technical terminology (particularly abbreviations) is rarely used and/or understood by micro-employers. Although those outsourcing are particularly at odds with HMRC’s terminology, agents are more likely to use the ‘right’ language although even here there is low usage of EYU. Dates and deadlines – what employers need to do and when – are the main cause of error and present the main challenges. Often unable to differentiate between the dates, micro-employers tend to default to their own priorities: 1. paying employees, 2. paying HMRC, 3. submitting FPS returns. Where they outsource their payroll, clients do not understand the importance of getting the right information to their agent at the right time. For many micro-employers, there is a disconnect between their behaviour and the outcomes of that behaviour. The challenges they face mean they do not always understand what would constitute ‘bad-practice’ or an ‘error’, from HMRC’s perspective. There are three categories of bad practice that contribute to errors: insufficient checking; prioritising other tasks; being too small to be seamless (such as no-one else in the business to submit FPS returns on time).
Diary dates Automatic enrolment staging date for employers with fewer than thirty employees with the last two characters in their PAYE reference number: 47–57, 8A–8Z, Q1–Q9, R1–R9, S1–S9, T1–T9, QA–QZ, RA–RZ, SA–SZ or TA–TZ
1 November
2 November 5 November
Due date for returns P46(Car) for quarter to 5 October 2016
Last day of tax month 7
6 November
First day of tax month 8
Last day for submitting a real time information employer payment summary to apply to tax month 7 Deadline for payment of PAYE and NICs etc to HMRC’s Accounts Office by non-electronic method
19 November
22 November
Deadline for payment of PAYE and NICs etc to HMRC’s Accounts Office by electronic method
| Professional in Payroll, Pensions and Reward | November 2016 | Issue 25 14
Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54 Page 55 Page 56 Page 57 Page 58 Page 59 Page 60Made with FlippingBook flipbook maker